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FCA consultations are they worth the effort survey

Regulatory Survey for Financial Advisers and Paraplanners

12 Nov 2019

FCA consultations are they worth the effort survey

The FCA carry out many consultations, all for very good reasons, at least we hope that is the case. But there is a suspicion in the intermediated distribution world that the reality is that the decision has already been made and that the consultation is there to demonstrate the inclusiveness of the regulator and nothing more.

I may be accused of being a bit cynical, perhaps over 45 years in the industry has caused some battle hardening, but just think about this a bit.

There are some 93,000 active, registered firms on the FCA 2018 register. There are 35,000 organisations with a single registered individual and 57,000 directly authorised firms who have some 120,000 individuals. 

So, time to make an FOI (Freedom of Information request) asking; “I would be grateful if you would confirm the number of consultations carried out from 31 August 2018 to the 1st Sept 2019.  The size of the audience involved and in addition I would like to know the total number of respondents in that year and the average number per consultation?”

The reply I got started to ring the alarm bells.

“Your request has now been considered.  The FCA has carried out 39 consultations during the period in question.  However, we estimate that to comply with the rest of your enquiry would exceed the appropriate limit for complying with a request made under the Act, as set out in the Freedom of Information and Data Protection (Appropriate Limit and Fees) Regulations 2004.  Therefore, for the reasons outlined in Annex A below, section 12 (cost of compliance exceeds appropriate limit) of the Act applies.

When we refuse a request because the appropriate limit has been exceeded, it is our general policy to provide advice and assistance to the applicant to indicate how the request could be refined or limited to stand a greater chance of falling within the cost limit.  However, in this instance, we are unable to suggest a way in which your request can be refined to come within the cost limit”.

I have been concerned for a very long while that consultations are very poorly engaged with. 

I asked Rory Percival for a steer.

He said “I imagine 100 or so for significant CPs but I imagine the figure is much lower for many so maybe a lower overall average. You should get a bit of a flavour by looking at some of the PSs where they list respondents”.

I asked him why it was so low?

He reckoned that “many think it won't make a difference”.” I suspect the main reason as far as a firm is concerned is that there isn't a culture of responding. 

So, not to be deterred, I went back and asked if they could look at the numbers for the last 5 consultations. And got this reply that should make us all very afraid.

"Your request has now been considered, and I can confirm that the information you are seeking is available from our website. 

For ease of reference, the details of each of the five consultations falling within the scope of your request, the figures you have requested, and the page where the relevant details can be found are provided in the table below".

 

Consultation details

Number of respondents to the Consultation Paper

PS19/25: Overdraft Pricing and Competition Remedies: Policy Statement

12 respondents to our CP
(Page 6)

PS19/24: Illiquid assets and open-ended funds and feedback to Consultation paper

43 respondents to our CP
(Page 8)

PS19/23: FCA and PRA changes to mortgage reporting requirements

19 respondents 
(Page 5)

PS19/22: Guidance on cryptoassets

92 respondents to CP 19/3
(Page 6)

PS19/21: Retirement Outcomes Review: feedback on CP19/5 and our final rules and guidance

62 respondents 
(Page 5)

 

There were 228 in total, an average of 45.6 per consultation.

If firms think it makes no difference to the consultation outcomes, this data could support that idea pretty well indeed as to why firms do not engage.

In democracy, it is reckoned that the electorate deserves the government it elects, the theory based on the assumption that this is the outcome for low turnouts. 

In this case regulated firms get the regulator they deserve, if some 93,000 regulated firms can manage to muster an average some 45.6 respondents per consultation. What hope is there for firms to engage with any FCA consultation if those responding feel there is not some very real input to shape positive outcomes that is listened to. 

What is the point and why should they bother?

Back to the drawing board?

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